Explain the impact and smoothing treatment

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Reference no: EM131970507

Case Shows How 'Janitors Insurance' Works to Boost Employers' Earnings By THEO FRANCIS and ELLEN E. SCHULTZ

The link below provides details of an article covering "Janitor's Insurance", the questionable practice followed by some corporations in which they take out life insurance policies on each employee - from the CEO down to the janitors.

The corporations will receive tax free proceeds upon the death of the employees and are not required to disclose this practice or pay any $ portion of the proceeds to the employees' families.

Please provide your thoughts on:

1) the moral / ethical issues involved with this type of insurance and,

2) the impact and smoothing treatment applied to the corporation's earnings as discussed in the article.

Reference no: EM131970507

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